At age 11, Trisha Taylor bought her first share of stock with $30 of her own savings and $250 from her father. When she completes high school next month she'll have a graduation present of $1,000 in capital gains.

At age 10, her sister Janie bought a longed-for horse with $250 she earned by doing odd jobs, plus $500 kicked in by her father. After enjoying the horse for several years -- and earning money for its upkeep -- she sold it for a $500 profit.

At age 49, their father, California stockbroker Tom Taylor, is understandably pleased. All three of his children worked while growing up, are helping pay their college tuition and are majoring in business.

"I consider the testimony of my kids proof that children today can be taught to appreciate the value of money," says Taylor, who 10 years go was "at a loss over how to raise them to handle money well.

"We're a country that's very economically illiterate -- as evidenced by our economic problems. Parents don't know enough about economics to teach their kids. Even with my financial background, I was unsure what was best."

With another father and fellow stockbroker Ken Davis, Taylor began researching the issue. The result is "Kids and Cash: Solving a Parent's Dilemma" (Oak Tree Publications, 280 pages, $8.95).

Money, they concluded (to no one's surprise), is one of the most trouble-prevoking aspects of family life. Says Taylor: "The way you teach children about money at home has a great deal to do with what sort of adult they'll become -- if they'll know how to save, or be afraid to take risks."

Parents often adopt policies that may teach children unhealthy attitudes about money. Among them: giving excessive money, bribery, secrecy and substituting cash for love.

"One of the worst things a parent can do is provide excessive money to kids," says Davis. "Kids don't respect parents who overindulge them. And they don't learn about working for a goal, budgeting and saving."

"But we don't owe our kids trips to Europe or cars or even college educations. What we do owe them is their own self-reliance, self-esteem and pride in earning their own way."

Another "money misuse" is the "busy-parents' tendency to substitute money for love," says Davis, noting that this a particular failing of divorced, non-custodial parents. Divorced parents, he says, should try to agree on how and when they will give the child money.

In addition to using money to buy love, some parents use money to buy obedience. "It's a form of bribery," says Davis, "to tell a child "if you're good I'll buy you an ice cream,' or I'll give you $10 for every A.'

"As they get older you'll have a child who won't take out the trash without asking 'how much?' Instead of realizing that there are some things we do because of responsibility and mutual support, they'll always be looking for the monetary pay-off."

On secrecy about money matters, Taylor says, "We've begun talking honestly about sex, but we're still afraid or embarrassed to tell our kids our salary or show them our budget.

"I know one family where the four children take turns writing checks to pay bills at the end of the month. What a great way to learn."

"The best possible way for children to understand the value of money is to earn some," says Davis, whose daughter earned $115 to buy a 10-speed bicycle when she was 11 years old and at 14 opened up a savings and checking account.

Regarding some parents' protests that "kids have the rest of their lives to learn to work and should concentrate on being kids," Taylor says, "Work isn't some horrible ordeal to protect them from.

"Watering the next-door neighbor's plants or walking pets can get them accustomed to the fun of work. They won't fear working eventually if they know work is expected in this society."

Among their suggestions:

Let a young child make spending choices. While in the store a pre-schooler can be given a quarter to spend. Don't tell the child what to buy: Let him or her make the choice.

If the child returns with an item that cost 30 cents, don't give out an extra nickel. Have the youngster go back and find something that can be purchased for a quarter.

This exercise teaches two things: "That there's not an unlimited amount of money' in Mommy or Daddy's pocket," and "How to make spending choices -- the child may make a spending mistake by buying something that breaks, or that they don't like, but will learn how to do better next time."

Have children contribute their own money to big-ticket items. "Even if you pay 90 percent and they pay 10 percent, have your child contribute to expensive things they want, be it summer camp or a bicycle."

Teach comparison-shopping skills. "If they want roller skates, have them look through newspaper ads and go to several stores before buying."

Encourage savings. Some banks have special programs to welcome young savers. Youthful members of Washington Federal's "Homer's Club" receive a T-shirt, special passbooks, certificate and membership card when they open an account.

Set a good example. "If you can't balance your checkbook, what are you teaching your kids?"

'Other resources:

"Families Learning Together" -- A new handbook for teaching basic skills at home is available by sending a tax-deductible contribution of $12 to The Home and School Institute, c/o Trinity College, Washington, D.C. 20017.

"Children's Spending" -- A booklet with tips for parents on teaching children how to manage money is available for 50 cents from the Money Management Institute, Household Finance Corp., 2700 Sanders Rd., Prospect Heights, Ill. 60070.